On the basis of production capacity, Enviva is the world’s largest supplier of utility-grade wood pellets for major electricity power generation companies. The company owns and operates five production plants in the Southeastern U.S. that have a combined wood pellet production capacity of approximately 1.7 million metric tons per year.
According to its Form S-1 filing, demand for utility-grade wood pellets is expected to grow at a compound annual growth rate of about 21% from 2014 to 2020. Growth is being driven by the conversion of coal-fired power generation and combined heat and power plants to co-fired or dedicated biomass-fired plants, principally in Northern Europe and, increasingly, in South Korea and Japan.
Following the IPO ownership of Enviva’s common units will be divided 42% to 58% between public owners and Enviva Holdings LP, the sponsor of the new company. If the underwriters exercise their options the ownership split will be 48.3% public and 51.7% Enviva Holdings.
Enviva said it plans to use the net proceeds from the offering to pay, together with borrowings under its new term loan facility, a distribution to the Sponsor; to repay intercompany indebtedness related to the acquisition of the Cottondale wood pellet production plant; and for general partnership purposes, including future acquisitions. The net proceeds from any exercise of the underwriters’ option to purchase additional common units will be used to pay a distribution to the Enviva Holdings.
With about an hour to go before Wednesday’s closing bell, the partnership units are trading at $21.57, up 7.8% from the IPO price. More than 7 million shares have traded today.
Sponsored: Tips for Investing
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.